Figures released by property information firm Hometrack show that house prices fell by an average 8.7% in 2008 and will fall by a further 12% next year.

Hardest hit this year have been properties in London, East Anglia and the South East, according to the company's survey of more than 1,800 estate agents and surveyors across the UK.

A 0.9% monthly decline in December, compared with a 1.1% fall in November, gave some signs that the housing market could be edging towards bottoming out.

But Hometrack's research director, Richard Donnell, warned of further price falls to come as rising jobless totals force more sellers into the market.

"The onset of recession and the prospect of rising unemployment over 2009 will continue to dampen confidence and in turn demand which will inevitably lead to further house price falls over the next 12 months," he said.

London saw the biggest price fall this year, down 10.1%. Homes in the capital and the South East are in short supply but demand has fallen away from previously high levels, the firm said.

Prices in the North East have fallen to a lesser extent - down 6.5% - followed Yorkshire and Humberside where average drops were 6.6%.

A 45% drop in sales volumes this year shows that many homeowners simply chose not to sell, and with mortgage lending also set to remain tight as banks struggle, Hometrack predicts housing turnover will equate to the average household moving once every 31 years - double the average of the last decade.

In December it took on average twice as long - 12 weeks - to sell a property than the peak of the housing boom in April 2007. The proportion of the asking price being achieved has also fallen back to 88.6%, well down on the April 2007 peak of 95.7%.

Mr Donnell added: "While there has been a steady move towards more realistic pricing over the last six months the weakening economic outlook is likely to result in an extended sales period over 2009."

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